Diabetes impairs the resolution of periodontal inflammation. We explored pathways altered by inflammation in the diabetic periodontium by using ligatures to induce periodontitis in type-2 diabetic Goto-Kakizaki rats. Ligatures were removed after 7 days, and rats were then treated with TNF inhibitor (pegsunercept) or vehicle alone and euthanized 4 days later. RNA was extracted from periodontal tissue, examined by mRNA profiling, and further analyzed by functional criteria. We found that 1,754 genes were significantly up-regulated and 1,243 were down-regulated by pegsunercept (p < 0.05). Functional analysis revealed up-regulation of neuron-associated and retina-associated gene clusters as well as those related to cell activity and signaling. Others were down-regulated by TNF inhibition and included genes associated with host defense, apoptosis, cell signaling and activity, and coagulation/hemostasis/complement. For selected genes, findings with microarray and rt-PCR agreed. PPAR-α was investigated further by immunohistochemistry due to its anti-inflammatory function and was found to be up-regulated in the gingiva during the resolution of periodontal inflammation and suppressed by diabetes. The results indicate that diabetes-enhanced inflammation both up- and down-regulates genes involved in cellular activity and cell signaling, while it predominantly up-regulates genes involved in the host response, apoptosis, and coagulation/homeostasis/complement and down-regulates mRNA levels of neuron, retina, and energy/metabolism-associated genes.